Overall, keeping fiscal deficit at 3.2 per cent of GDP and increasing capital expenditure by 25 per cent are noteworthy achievements of the FM
Having gone through the demonetization experience with a smiling face, the honest and tax-paying janta patiently with baited breath for PM’s promise of ‘achche din’ and were thus anticipating that this Budget would ease their endured pain with widely expected tax sops.
‘Tax Administration – Honouring the Honest’ was one of the 10 key Budget themes laid out by the FM. As expected, the FM proposes to reduce the tax rate to 5 per cent for individuals earning taxable income between Rs 2.5 lakh to Rs 5 lakh. Further, for resident individuals, the taxable income threshold for claiming a rebate is being lessened to Rs 3.5 lakh from Rs 5 lakh along with lowering the prevailing rebate from Rs 5,000 to Rs 2,500.
Bringing a major change to House property taxation, the FM proposes to bring parity between a let out and self-occupied property, by restricting the set-off of loss from any house property against income from other heads during a given tax year to Rs 2 lakh. The balance loss will be carried forward and eligible for set off against house property income for 8 assessment years.
The Budget also introduced a new provision wherein tax would have to be deducted at 5 per cent by an individual and HUF (not covered earlier), while paying rent exceeding Rs 50,000 per month. Thankfully, such individuals and HUFs need not take TANs and can deduct the entire TDS only at the end of the year/tenancy period.
The holding period for immovable property to be a long term capital asset is proposed to be brought down to 2 years from 3 years and the base year for computing indexation is being shifted to 01 April 2001 from the age old 01 April 1981.
Overall, keeping fiscal deficit at 3.2 per cent of GDP and increasing capital expenditure by 25 per cent are noteworthy achievements of the FM. All in all, the FM has done a great balancing act on the personal tax front.
(Inputs from Pramod Achuthan, Tax Partner, EY)
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